Supply & demand

Our markets

Global GDP growth for 2012 was just over 3% but with a
wide geographic dispersion. The US market grew at
around 2% for the year and this has strengthened
marginally into 2013, while China’s growth rate of about
7.8% is expected to contract this year. Europe remains
firmly in the grip of recession as austerity programmes
constrain any prospects of growth. At the time of writing,
however, very tentative signs of stability and recovery are
beginning to emerge. The European Union and indeed the
euro have managed to survive the economic turmoil, but
much more is required to stimulate this economy.

Japan has adopted its own version of quantitative easing
with the yen depreciating nearly 20%, thereby boosting
export focused industries such as automotive and
electronic. Despite this seemingly good news, world
growth remains fragile and tentative and further shocks
can by no means be ruled out.

Against this backdrop of global uncertainty, investor
sentiment towards the PGMs and commodities in general
remain weak, and the ample availability of physical metal
negatively impacted the prices of our metals.

Markets performance

Significant labour disruptions compounded by
government-led safety stoppages resulted in the loss of
some 600 000 ounces of platinum production during 2012
to a level not seen for a decade or more. Perversely this
allowed the removal of some of the excess above-ground
inventory from the market, but even this could not impact
on pricing, highlighting the extent of inventories.

The growing automotive industry continues to underpin
demand for our metals, notwithstanding the geographic
diversity of this growth. China and the US – both gasoline
dominated markets – continue to perform well and are
driving global growth, but European sales continue to
disappoint and are hovering at multi-year lows. With
Europe’s significant diesel share this is having an impact
on platinum demand. Remaining elusive is the emergence
of cleaner diesel in China, which will allow the fitment of
catalytic devices to the world’s largest heavy-duty diesel
fleet in order to alleviate the pollution problem being
experienced in that country.

Light-duty vehicle sales

Units: Millions

2011

2012

(Forecast)
2013

North America

13.1

15.4

16.1

Western Europe

14.0

12.7

12.1

China

17.1

18.2

20.3

Japan

8.1

9.5

9.2

Rest of the world

24.3

25.7

25.6

76.6

81.5

83.3

Platinum jewellery demand remains resilient in the lower
price environment, and is further supported by the
extension of China’s retailers into third and fourth tier cities
which have until now not had significant access to this
metal. Gold’s premium over platinum during parts of the last
year also stimulated some substitution away from white
gold. Trade on the Shanghai Gold Exchange during the first
half of 2013 has been significantly above that for 2012, but
we believe a greater industrial bias is emerging from
this source.